Southwest Airlines LUV
United StatesIndustrials · AirlinesUSD
49.44 USD (+18.5%)
23 analysts
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Southwest Airlines is a US low-cost airline operating domestic and international short- and medium-haul flights, with a point-to-point model and a uniform fleet of Boeing 737s.
Key points
from its scores- ✓Strong growth7.7
- ✓Good share-price trend7.6
- ✕Little competitive advantage3.1
- ✕Fragile balance sheet4.9
- !Somewhat demanding valuation5.5
AI analysis
bottom line, main risk, context and newsGrowth and forward valuation are attractive, but weak margins and cash generation warrant caution until a sustained operational improvement is confirmed.
Southwest Airlines shows solid growth (revenue +16.4%, earnings +20.5%) and an attractive forward valuation (P/E 9.06), but its financial health is fragile: operating margin of only 3.38%, negative free cash flow conversion (-35.7%) and a current ratio of 0.49 that limits its investment capacity and resilience to shocks.
The main risk is the combination of very thin margins (3.38%) and negative free cash flow conversion (-35.7%), leaving the company with little cushion against a rise in fuel prices or a slowdown in demand.
Context and risks
No recent relevant news and no material exposure to current macro factors (rates, oil, tariffs) that is not already reflected in its metrics. The main risk is operational and sector-specific: very thin margins (3.38%) and negative cash conversion in an environment of high labor and fuel costs.
Is Southwest Airlines stock cheap or expensive?
at the analysis dateOn P/E and EV / EBITDA, it trades in line with the Industrials median (within 15%).
| Multiple | Company | Sector | Difference |
|---|---|---|---|
| P/E | 26.1 | 25.4 | +3% |
| EV / EBITDA | 10.2 | 14.5 | −30% |
| Price / book | 2.9 | 4.1 | −29% |
| Price / sales | 0.7 | 2.1 | −67% |
Sector: median of the 388 Industrials companies analysed. In bold, the multiples used for the comparison.
Valuation score: 5.5 out of 10 (median for Industrials: 5.0).
Average analyst target: 49.44 USD, +18.5% versus the price.
Classic formulas with standard assumptions (10.0% growth, 8-9% discount rate). Indicative only: they change a lot with the assumptions and are not a recommendation.
Work out its fair value yourself →How much would you have made investing every month? →
Comparing it with its sector does not say whether it is a good buy: this is not investment advice.
Score by category
0 to 10 · hover overtap each one to see what it measuresKey metrics
at the analysis date · compared with the Industrials medianValuation
- P/E
- 26.1
- Forward P/E
- 9.1
- EV / EBITDA
- 10.2
- Price / book
- 2.9
- Price / sales
- 0.7
- PEG
- 0.20
- Market cap
- 20.4B USD
- Enterprise value
- 23.9B USD
Profitability
- ROE
- 11.1%
- ROA
- 2.3%
- ROIC (approx.)
- 7.3%
- Gross margin
- 22.4%
- Operating margin
- 3.4%
- Net margin
- 2.8%
- Free cash flow
- −834.8M USD
- FCF yield
- −4.1%
- Cash conversion
- −36%
Solvency
- Total debt
- 6.9B USD
- Net debt
- 3.1B USD
- Cash
- 3.8B USD
- EBITDA
- 2.3B USD
- Net debt / EBITDA
- 1.33
- Debt / equity
- 97.28
- Current ratio
- 0.49
- Quick ratio
- 0.38
Growth
- Revenue growth
- +16.4%
- Earnings growth
- +20.5%
- EPS (TTM)
- 1.60 USD
- EPS (forward)
- 4.60 USD
Dividend
- Dividend yield
- 1.7%
- Payout
- 45.0%
Risk and market
- Beta
- 1.16
- Analyst consensus
- Buy (23)
- Target price
- 49.44 USD
- 52-week range
- 29.26 – 55.11
Recent news
All LUV news →Compare it with its sector
All 388 in Industrials →Frequently asked questions about Southwest Airlines
Is Southwest Airlines stock cheap or expensive?
On P/E and EV / EBITDA, it trades in line with the Industrials median (within 15%). Valuation score: 5.5 out of 10 (median for Industrials: 5.0). Average analyst target: 49.44 USD, +18.5% versus the price. This is not investment advice.
What score does Southwest Airlines get on MeridIAn Screener?
It scores 5.4 out of 10, rank 1,485 of 2,130 (better than 29% of the companies analysed). Its strongest category is Growth (7.7) and its weakest, Quality / Moat (3.1). Analysis of 08/10/2026.
What is Southwest Airlines's P/E ratio?
Its P/E is 26.1: the share price equals 26.1 times earnings per share over the last 12 months. The Industrials median is 25.4. Based on the earnings analysts expect, the forward P/E is 9.1.
How much is Southwest Airlines worth on the stock market?
Its market capitalisation is 20.4B USD and its enterprise value, debt included, is 23.9B USD.
How much debt does Southwest Airlines have?
Its net debt (debt minus cash) is 3.1B USD. That is 1.33 times its EBITDA; the Industrials median is 1.58.
Does Southwest Airlines pay a dividend?
Yes: its dividend yield is 1.73% and it pays out 45% of its earnings.
How has Southwest Airlines stock performed over the last year?
It has risen 35.7% over the last year, excluding dividends. Over the last 52 weeks it has traded between 29.26 and 55.11 USD. Past performance does not guarantee future results.
What do analysts think of Southwest Airlines?
23 analysts cover it; their average recommendation is “Buy” and their average target is 49.44 USD (+18.5% versus the price). It is an estimate, not market data.